The prices of gold increased very slightly on Wednesday, October 23, 2019, because of an increase in technical buying.
U.S. gold futures gained by 0.3% to $1,492.40 an ounce while spot prices rose by only 0.1% to $1,489.31 an ounce. The price momentum was capped by investors’ concerns about the Brexit deal.
According to SMC Comtrade’s assistant vice-president for commodity research, there has been an increase in technical buying of gold since it dropped to $1,470 an ounce. The minor price increase was also supported by Brexit uncertainty.
The British Parliament voted to back the Withdrawal Agreement Bill but rejected Prime Minister Boris Johnson’s proposed timetable for the ratification of the bill. European Union (EU) Council President Donald Tusk suggested that the EU should consider delaying Brexit since the UK may be forced to hold an election to break the Brexit deadlock.
The rejection of Johnson’s proposal to expedite the ratification of the Brexit bill affected the U.S. stock futures and the Asian stock markets.
On the issue of trade talks, the U.S. and China have already made some progress. Chinese Vice Foreign Minister Le Yucheng said that all problems can be resolved if both sides respect each other. The protracted trade dispute has affected the financial markets and fears about a global economic slowdown.
In a related development, gold traders and investors are anticipating a quarter basis point interest rate cut in the October meeting of the Federal Open Market Committee.
Meanwhile, the holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust dropped from 924.64 tons to 919.66 tons. This indicates investors’ interest in the yellow metal.
Wang Tao, a technical analyst with Reuters, said spot prices are likely to break its support pricing level of $1,479 an ounce and go down further to its next support level of $1,456 per ounce.
CMC chief market strategist Michael McCarthy added that the gold price has been fluctuating between $1,490 and $1,535 an ounce and a movement away from these two price levels will point to a new pricing direction.